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Missota Paper comes to Minnesota
by Tim Post, Minnesota Public Radio
February 14, 2003

A Michigan company called Missota Paper is going to buy a mill in Brainerd that closed last year. When the Potlatch paper mill shut down, more than 600 people lost their jobs. The new owners hope to hire about a third of the laid off workers to restart the paper mill. Industry experts say the plant's success won't come easy because the nation's paper industry is in a slump. But Missota officials say they have a plan that will make the plant profitable, it includes a smaller workforce and lower wages.

Brainerd, Minn. — Potlatch used to own two paper mills in Minnesota. But last May Potlatch sold one of them to South African paper company Sappi Limited. The other mill in Brainerd wasn't part of that deal. Potlatch shut it down and put it up for sale, 616 workers lost their jobs. Brainerd Mayor James Wallin says it's been tough for his city.

"Those were all high paying jobs that really benefited a community in many ways. The roughly $42 million dollar payroll turned around about six or seven times in a community, so it was really an economic disaster," Wallin says.

But less than a year later there's a plan to bring some of those jobs back to Brainerd. Michigan-based Missota Paper will re-open the mill in a deal worth nearly $25 million dollars. The company will make high quality, uncoated paper, the kind used for everything from greeting cards and office paper, to pamphlets and brochures. Missota CEO Dan Alexander has turned around paper plants in Maine and Ontario. Alexander knew a restart of the Potlatch plant was possible when he first saw the mill.

"The mill is in excellent condition. Potlatch did an outstanding job of moth-balling the facility and dissasembling a number of key parts so we were able to inspect those components to see that they were in good shape," Alexander says.

Even though the plant's condition is a plus, the company is bringing the plant on-line at a tough time. A slump in the global economy has eased demand for paper. Competition is fierce. And dozens of paper plants across the country have shut down in the past few years.

David Beal is former president of Lake Superior Paper Industries in Duluth. The now retired Beal spent 30-years in the paper industry. He says this is not the first time paper has seen a slump.

"But at least on average, the good years made up for the bad years. But it wasn't until recently we've seen a downturn and probably the longest cycle downturn that I have personally witnessed in my years in the paper industry," Beal says.

Beal says Missota Paper's efforts in Brainerd can be a success. That is if the company can make a profit while treating it's employees well. Missota CEO Dan Alexander says they've already mapped out a strategy. They have a customer base for their paper. And they're going to hire up to 260 former Potlatch employees to get the company off the ground. That's a third of what the workforce used to be. Those employees will be paid 17 percent less than before. Alexander says to stay competitive, they had to lower wages. He says at $14 to $18 dollars and hour, the wages are still above average for the area.

The new Missota workers are still represented by the same union. The Paper, Allied Industrial, Chemical and Energy Workers International Union. Representative Marv Finendale says even though the jobs will pay less at Missota, workers are glad to have the chance to get back to work. Finendale says everyone understands how important this business effort is for Brainerd.

"It's going be a relationship where everyone is helping each other and working together to establish the business so it's an on-going success. If the business fails I don't know if you're ever going to get someone in that plant again," Finendale says.

Missota officials will hire 160 workers in the next few weeks. They expect to hire 100 more by fall. Company officials hope all the paperwork for the sale is done by late February. If that happens, they say Missota will start making paper by the middle of March.

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